Ms. Ibukunoluwa Odegbaike is the Managing Director of Guaranty Trust Bank, East Africa. Ms. Odegbaike has over 19 years banking experience spanning operations and sales and marketing.

Ms. Odegbaike is involved in the overall management of the bank’s day-to-day operations.

Before her appointment to her current role, Ms. Ibukunoluwa held various positions at Guaranty Trust Bank Plc, Nigeria. She joined the Bank in 1996 as an officer in Transactional Services Group of the Bank. Subsequently, she headed the Bank’s Private Banking Group in charge of portfolio management of the high net worth individuals of the Bank.

Before joining Guaranty Trust Bank (Kenya) Limited, she was the Head of Retail Banking, in charge of developing, executing and managing both the financial inclusion and retail strategy and tactical business plan of the Bank. This includes target market selection, customer and product propositions within the broad framework of the Bank’s strategy.

She holds a Bachelor of Science degree in Biology from University of Lagos, Nigeria and has attended several senior management courses including the INSEAD high performance management programme and Cranfield executive leadership programme.

KBA CEO CHAT - SME Opportunities & Challenges

We are looking forward to todays discussion on the SME sector...hosting the CEO Chat today is Sammy Itemere of Equatorial Commercial Bank

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Last week we discussed the interest rates environment with Arun Mathur...please read the Chat Log and Watch the Podcast if you missed the Chat

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We covered how banks price loans, the interplay of bank rates and the Central Bank Rate...how banks pricing models differ from SACCOs, and also Credit Information Sharing

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Today we focus on the SME...talking about the opportunities locally and witihn the region; and the challenges faced by these enterprises

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We start promplty at 10am...thank you for joing us!

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Meredith, Janet, Elizabeth, Ruth...thank you for logging on...

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Welcome John

John Komu

thank you Admin

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Welcome Ikua and Nuru to the chat

Elizabeth Muguiyi

Thanks

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Shadrack Muinde

Thank you too

ruth kimeu

Thanks

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Welcome Wangui

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We will be starting shortly.

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Welcome Angela to the chat.

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Welcome Martha thank you for logging in.

Angela Nyabera

Thanks!

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Today we focus on the SME...talking about the opportunities locally and witihn the region; and the challenges faced by these enterprises

Erick Ngosia

Hi Guys

Chat Admin

Hi Erick, thank you for joining the chat

Chat Admin

Welcome Mr Sammy Itemere. The floor is now open for questions.

Erick Ngosia

Appreciated

Sammy Itemere

Good morning and welcome to this Chat...I'm Sammy Itemere, the CEO of Equatorial Commercial Bank...Im looking forward to having this discussion with you on SMEs...the opportunities and challenges that they face, thank you

Sammy Itemere

Well, let me have the first person who would like to engage in the discussion

Erick Ngosia

Sammy Itemere, thanks for this opportunity, how does ECB help people, mean young entrepreneurs to scale up their ladder?

Sammy Itemere

Thank you Erick for getting us started...lets talk about young entrepreneurs generally...what I can say is that banks are committed to supporting young entrepreneurs in their efforts to start up businesses...they are doing this through getting into partnerships with certain international institutions, DFID, USAID, who have funds specifically to support certain start up businesses targeting the youth

John Komu

Hello Sir, ABC bank is running a campaign that allows SME to access funds based on invoices issued to clients are other banks going to start offering similar products?

Elizabeth Muguiyi

Thank you Sammy, what do you see as the most promising sectors for SME's?

Sammy Itemere

...in addition, the kind of support goes beyond financial...these programs are structured to be a holistic approach and ensure that capacity building is core...so that the young entrepreneur is helped in running a successful business

Sammy Itemere

Thank you John ...the product you mention is offered by most banks...it is called LPO discounting or invoice discounting

Sammy Itemere

Elizabeth, this is a good question

Elizabeth Muguiyi

Is there a ceiling on the age of people who can have acess to these funds and capacity building? What criteria do they use for this?

Erick Ngosia

AND what of those youths who dont have the the required security and are willing to engage in a business, how do yuo help such you as a ECB?

Sammy Itemere

...there are a number of promising sectors that we can look at...some include transport, ICT sector, agriculture, there is opportunity around agriculture particularly because it pays a key role in the economy so increasingly we're seeing a lot of entrepreneurs going into farming for export....also hospitality...

Sammy Itemere

another area for entrepreneurs is the services sector, including consultancy services

John Komu

thank you for that answer, why do banks find it had to offer loans to young individuals who want to start businesses in non-traditional businesses, such as software development and design studios?

Sammy Itemere

Erick thank you for your follow up question

Sammy Itemere

...banks are willing to engage such individuals who may not have adequate security or collateral...banks would normally wish to look at the nature of business, the expertise that you have, and then looking at that they can see how you can be supported...however, we encourage there are various ways to build up capital that will help you create the business track record (especially cash flows) that banks would be keen to look at and on that basis make a decision to lend -- with or without security

Sammy Itemere

Elizabeth, when it comes to capacity building...there really is no age limit...it is more of the age of the business

Austine Mwinzi

Given that the Banking sector is looking forward at bridging the financial gap in the SME sector, we do have other serious challenges facing the sector such as inadequate managerial skills, access to markets, value chain management etc. Kindly share with us any likelihood of the banking sector having a strong partnership with institutions/association representing the SMEs to counter the challenges?

Elizabeth Muguiyi

Great, so even if one is above 35 and seeking to start a new business, they can still have acess to these funds mentioned above? Does ECB run with such programmes?

Sammy Itemere

John, there are people who can support that...and the financier may not necessarily be a bank...it could be an equity fund investor or pooling resources could be another way

Sammy Itemere

Thank you Austine...

Donald Kogai

Morning Sammy, research suggests that two-thirds of SME start-ups collapse after 1 year mainly due to financial difficulties. What can banks do to support SMEs to grow past this stage when they are most vulnerable?

Joan Wairimu

Hi Sammy., what would you say is the biggest mistake the youth / start-ups / SMEs are making in their endevours and what would be the solution(s)?

Sammy Itemere

...i think that is a good question...there are programs that banks undertake through business clubs, where they invite expertise to assist with capacity building in areas such as management, accounting, how to file taxes, value addition; and even also opportunities around how to access certain markets. for example Rwanda, Uganda, and other markets...these clubs give SMEs opportunities to interact, broaden their knowledge...

Sammy Itemere

...when you interact in those forums as an SME, you identify opportunities to coordinate and provide services across the value chain for big businesses

Martha Lee

Morning Mr. Itemere. Thank you for the opportunity to chat and discuss our thoughts with you. My question is, how does a SME access the financial assistance that organisations are offering when the SME does not have any security?

Sammy Itemere

Good question Donald

Erick Ngosia

Appreciated very much, now about Education loans, do you guys have education loans and what is the security for such loans?i think this may be outside the scope of discussion but just incase you can respond to it?

Meredith Njenga

Hello Sammy, In my opinion Micro-finance institutions are bringing up stiff competition and have better products to suit SME needs. For a startup, why should i choose a bank over an micro finance institution? What are banks doing to better their SME lending products or services?

Joan Wairimu

The funds that the government is offering be it Uwezo, Youth or Women fund ...do you think they are in a way prohibitive especially on membership?

Sammy Itemere

I would just say that the key issue here is ensuring that you partner with a bank that can offer you information that will help you go beyond the first year...and some of those interventions as I mentioned are the forums or business clubs that banks create to foster interaction between SMEs, and provide capacity building...and through those interactions, you learn and grow in your business

Chat Admin

Joan Wairimu - Hi Sammy., what would you say is the biggest mistake the youth / start-ups / SMEs are making in their endevours and what would be the solution(s)?

Austine Mwinzi

That is great Mr. Itemere, I now have a clue on how to go about it, I will keep in contact with you/ECB since the sector is very crucial in the realization of vision 2030

Sammy Itemere

Thank you Joan Wairimu...

Sammy Itemere

Regarding Uwezo fund, I dont think those funds are prohibitive as stated by Joan...because these are public funds that the Government has set aside to support women and youth in this country...

Sammy Itemere

...on the other question on the biggest mistake that SMEs make, i would say the issue of "copy cats"

Sammy Itemere

...as in when you see a thriving business, and you quickly register a company without really understanding the opportunities, the market before you start...i think that is one of the biggest mistakes that SMEs make...also the informality of operations, which means, being really casual about your business and yet the business as real potential...

Sammy Itemere

some of the areas that need to be formalised for any sized business, include record keeping, maintaining a long term relationship with a bank for financial services, seeking professional advise on your business (beyond family and friends)

Chat Admin

Martha Lee - Morning Mr. Itemere. Thank you for the opportunity to chat and discuss our thoughts with you. My question is, how does a SME access the financial assistance that organisations are offering when the SME does not have any security?

Abraham Kiptum

Morning Sir Why is it that the Kenyan Banks dont lower rates of interest even when the Central Bank rate is lowered ?

Austine Mwinzi

From your points @Sammy, I believe for our SMEs to realize their visions a lot of awareness is needed and in addition advocacy to make sure the hindrance/barriers to growth and sustainability are dealt with

Sammy Itemere

Hi Martha...we touched on this earlier but I can just maybe build in a little more by saying that there is more than just asking for a security by banks; banks look at the character of the applicant, the ability to repay the loan; whether the owner has invested capital of their own into the business; what the purpose of the credit/finance requirement is...repayment schedule, etc., and finally if there is any insurance intervention...so there are a number of things banks consider when financing a business...i urge you to shop around and see which bank meets your needs

Sammy Itemere

Hi Meredith, very good question

Sammy Itemere

...I think Microfinance give SMEs what I would define as the start up capital or financial requirements...as you grow, you will need a bank...and that is why I would recommend this approach...banks bring, especially for SMEs, banks bring the expertise as you are growing, especially from an exposure perspective...

Don Baraka

Morning.. How is ECB embracing Social Media Networks to improve SME product development

John Komu

@Sammy on the aspect of informality with which SME's approach their operations, what are banks doing to ensure that their customers are following the right track on things such as record keeping and filling tax returns?

Sammy Itemere

....generally, banks and microfinance institutions work together to support SMEs, and each has value to add...microfinance on the initial stage; and banks helping you grow

Sammy Itemere

Austine its a good comment, I agree with you, it is more of the awareness and capacity building is required, and Im glad to say that a number of banks are in partnership with organisations/development partners to support SMEs because we recognise that SMEs play a major role in this economy and the region

Andrew Kabeke

Greetings Sammy, having gone through the chats there is alot of questions concerning debt financing in terms of partnering with banks. My question is what are your thoughts about equity financing for start ups and can banks play any role in this?

Joan Wairimu

You spoke about partnerships with organizations like DFID on funds etc...how much money does ECB have in this line to lend to SMEs?

Sammy Itemere

Thanks Don for that question, as ECB we are working to develop our social media as a means of communication on service delivery but broadly banks have rolled out various social media channels to support SMEs as a means of faster communications to clients ... social media is a good platform that can be used to get feedback from the SME sector in regards to products being offered

Sammy Itemere

Hi Andrew...

Sammy Itemere

...debt financing is key especially for businesses that are either existing or starting up...on equity financing, im glad to say that through the capital markets there are interventions being put in place, for example the Nairobi Securities Exchange Growth Enterprise Market Segment (GEMS) that is used for growing companies...there is also in addition the role of private equity funds that are looking to support or partner with businesses

Andrew Kabeke

Hello Sammy, glad to chat with you and thanks for participating in the forum...

Njoki Riguga

Sammy, Hi. I would like to know what banks are doing regarding performance and bid bonds that normally tie up funds hence a major challenge to SMEs. Essentially how can the service be made friendly to ensure a win win for the SME and banks

Sammy Itemere

Joan, thanks, without getting too off topic, I can say that ECB has recently signed an MOU with African Guarantee Fund which guarantees financing up to 50pct of the borrowed amount...the fund is Kesh212 milion... this will therefore increase ECBs risk appetite in supporting SMEs...but may I add that a number of banks are also in various partnerships so its good to shop around and see what facilities are available

Njoki Riguga

on GEMS, what explains the partake by only one company so far yet there are various SMEs in need of financing?

Sammy Itemere

Njoki you raise an interesting point, yes, banks have the bid bond service where they discount the invoice and pay a portion of the money to enable the client to have the working capital...decisions on how much banks are willing to discount (or the Win Win as you note) is determined by the parties involved in that transaction...

Sammy Itemere

Njoki a good observation on GEMS, its more around the regulatory requirements and disclosures that one needs to make to enable them to partake on these facilities, whether it is the GEMS or private equity

Sammy Itemere

I saw a question from Abraham on interest rates vis a vis Central Bank Rate

Don Baraka

Thanks.. Is it possible to SME's to buy your insurance products through your website or Twitter

Sammy Itemere

There is a common misconception that banks are not lowering interest rates; but in fact, bank rates have lowered from an average of 19pct/20pct to 15pct/16pct which is a good indication that indeed banks are responding to the signal of stable interest rates in the market as indicated by Central Bank

John Komu

@Sammy would banks be interested in setting up on-line forums and business groups where SME's can discuss and be guided by industry specialists?

Sammy Itemere

The Central Bank Rate is a policy rate and is one of the parameters that banks consider in their pricing...other parameters include the level of liquidity in the market at a given time; and borrower specific characteristics which give an indication of the risk profile

Fred Makau

Other than financing, any other incentives you offer SMEs to encourage them to partner with banks in running their businesses?

Don Baraka

@John Good question in relation to On-line Forums

Sammy Itemere

Thats a good idea john...banks would be interested if conducted to set up online forums such as this CEO Chat facilitated by KBA, to help build capacity

Sammy Itemere

Thanks Fred, we've discussed the value proposition that banks offer, I encourage business owners to shop around and see what various banks are offering...you would be looking for if they offer business forums/clubs and financial advise; if there is flexibility in the financing options; the kind of relationships the bank has with other partners including guarantee funds, insurance, etc. that can enable the business to access appropriate funding at a competitive price.

Joan Wairimu

With the clamour for self employement / entreprenuership...do you think the youth are enthusiastic to start up own businesses?

Chat Admin

We are about to wrap up as our time is almost over. Any final thoughts or comments?

Martha Lee

Mr Itemere, is there a way that banks can provide a stop gap for SMEs? like if a farmers crop all dies, or the quails they were farming also die, or if the prices in the product they are dealing in drop and thus having a significant loss?

John Komu

I agree, KBA would play a key role in such a set-up and the capacity building would go a long way in helping SME's survive beyond the 1st year

Fred Makau

Thanks a lot for the informative session. Keep it up!

Samuel Wambugu

Thank you for the opportunity to chat and discuss our thoughts with you. Challenges in SMEs are many and varied from their start-up, growth and development. SME challenges are cushioned througth various methods in different countries. In some countries like Malaysia the Business Incubation model has been very usefull in supporting SMEs. The Public-Private sector Partnership (PPP) approach is very usefull in achieving the desired results. I have visited these incubation incubation centers in Malaysia (and undergone training in their management) and I am personally I am very passionate about this business incubation approach.My question is: are there banks in Kenya interested this approach so as to reduce the challenges and through increased opportinities for survival, growth and development of SMEs in Kenya?

Sammy Itemere

Martha we recognise that these are some of the real challenges that SMEs face daily...there are interventions through products that banks offer such as insurance for crop failure, even on the quails issue you mention...we really encourage SMEs to take insurance cover

Sammy Itemere

Karibu Fred

Don Baraka

Thanks for your Time @itemereS #ulizadon #blessedwednesday

Sammy Itemere

Samuel thank you for your observation and sharing your experience from Malaysia

Joan Wairimu

With the clamour for self employement / entreprenuership...do you think the youth are enthusiastic to start up own businesses?

Sammy Itemere

I agree with your observation that the aspect of PPP has a potential of addressing the challenge of investment aspects that have a public dimension and yet are amenable to private sector participation...regarding business incubation, my view is that SMEs should not hesitate to engage banks in at what stage the bank can support them and help them grow, and I think in our chat this morning we've talked about some of the opportunities such as the funds banks have in partnership with development finance institutions; also we discussed the Uwezo fund which targets women and youth...these are some of the interventions available to support SMEs

Sammy Itemere

on the aspect of incubation...in this market we typically see this taking place within the specific industry versus through the banks

Sammy Itemere

Joan I'll take your question as a final comment

Abraham Kiptum

Are the MIcrofinance Institutions Interest rate guided CBK

Sammy Itemere

In view of the fact that we are not generating employment opportunities in this country as fast enough, the youth would be persuaded to engage in start up businesses...i see this increasingly becoming a very common thing in this market because of lack of job activities...we see dairy start up businesses where a graduate starts a business with two cows and now doing extremely well; ...entrepreneurship is something that people would embrace as a viable option and should not be seen as a last resort

Sammy Itemere

Final comments...this has been a very interesting and exciting experience...ive enjoyed chatting with you, entrepreneurs and people interested in starting businesses, i wish to give our commitment as an industry that we are there to work with you to prosper even as the nation prospers.
Do have a productive day. Thank you, good bye.

Chat Admin

Thank you Mr Sammy Itemere for giving us your time and insights. And thank you to all of you who have participated in making this chat session lively and informative. We look forward to seeing you all online once again next week when we discuss Building Youth Enterprises through Savings and Investments with Dr Nyambura Koigi, CEO of Postbank.

Joan Wairimu

Good day Sammy., thank you.,

John Komu

Thank you very much for your time, we hope to see banks following through by helping SME's grow through capacity building

Fred Makau

Thank you for the insights Sammy.. Thank you KBA for organizing the session too..

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